San Francisco's plan for a $1.6 billion downtown subway has hit a snag over a $250,000 perfume and cosmetics counter in the basement of Barneys.

The city recently condemned the kitchen-size counter at the high-end Stockton Street retailer to make way for the 1.7-mile-long Muni subway that will run from Chinatown to South of Market.

Barneys, which opened its doors here in late 2007, is one of 13 retailers in the Union Square area that are having parts of their basements reclaimed by the city.

Neiman Marcus is losing the boutique space where it now sells $3,000 Gucci leather jackets. Macy's will lose the square footage now devoted to its Martha Stewartcollection of housewares.

Unlike the other stores, however, Barneys is fighting the subway seizure. It says it should be paid "millions" because the city issued a permit for the basement counter three years ago without warning it might later be revoked.

The city wants to take over the space at month's end, part of the long process that is supposed to culminate in the subway's completion in 2018. Barneys has filed an appeal asking the Board of Supervisors to halt the order, something the mayor's team says is unlikely.

Martin Orlick, an attorney for Barneys, tells us the real issue isn't the "bulldozing of a cosmetics counter."

It's the "multimillion-dollar reconstruction of Barneys' basement" that the subway construction will require, he said - ultimately resulting in "the permanent loss of valuable retail space."

Phone bust: Cell phones are a no-no inside California's prison system - for prisoners and staffers alike - so you can imagine the embarrassment at San Quentin the other day when 33 personal phones were confiscated from guards and other employees during an unannounced screening.

Just days later, officials found three cell phones in the possession of inmates.

That discovery prompted a 12-day lockdown while corrections officers combed the prison from one end to the other. The lockdown was lifted Christmas Eve.

Cell phones are barred inside the prison because calls can't be monitored.

An eyewitness who was visiting the prison's North Block while the staff search was under way described guards being ordered to empty their pockets inside the visitors waiting room as they arrived on duty.

"When they checked outside the waiting room, they found more cell phones that had been discarded by guards," said the visitor, who asked not to be named for fear of retaliation.

Prison spokesman Lt. Sam Robinsonsaid all 33 employees caught in the act face varying degrees of discipline, though he declined to be specific.

More musical chairs: Saying she wants to spend more time with her family, Alameda County Supervisor Alice Lai-Bitkerhas decided not to seek re-election this year.

Lai-Bitker got her start in politics as an aide to Supervisor Wilma Chan, and was appointed to her seat representing Alameda, Oakland and San Leandro when Chan moved on to the state Assembly to replace Don Perata.

No sooner did Lai-Bitker make her announcement than Chan, who was termed out of the Assembly a few years back, announced she was running for her old seat.

Coincidentally, her campaign manager will be Larry Tramutola, who is also directing Perata's campaign for mayor of Oakland.

Family ties: Lisa Seitz Gruwell, the San Francisco Recreation and Park Department's $100,000-a-year outreach, education and customer service manager - and wife of major Mayor Gavin Newsombacker Chris Gruwell - is moving back to the private sector.

Return to sender: San Francisco Mayor Gavin Newsom has fired off a letter to Alameda County supervisors, urging them to rescind their plan to throw recipients off the general assistance rolls after three months.

The county says it can't afford to keep people on welfare longer than that. Newsom argued that cutting people off from their $336 monthly checks might seem like a money saver, but will drive up crime and other social costs in the long run.

Newsom even offered to contribute staffers to help Alameda County come up with an alternative.

The subtext, of course, is Newsom's fear that if Alameda County cuts its welfare rolls, the homeless will come over to San Francisco.

To which Alameda County supervisors President Alice Lai-Bitker replies: "Gavin needs to stay within his own county. We don't want to be a magnet, either."

Latest from the SFGATE homepage:

Click below for the top news from around the Bay Area and beyond. Sign up for our newsletters to be the first to learn about breaking news and more. Go to 'Sign In' and 'Manage Profile' at the top of the page.